Weak demand leads to stockpiling of milk powder in Maharashtra

Maharashtra is suffering from excess stocks of skimmed milk powder (SMP). The state’s inventory of SMP has reached nearly 50,000 tonnes. As a result, dairy owners in the state say that they are not in a position to hike milk procurement prices for farmers.

Dairies in the state pay farmers Rs 23-24 per litre. Before the lockdown, dairy farmers were being paid a relatively higher procurement price of Rs 30-35 per litre. Due to the mismatch between demand and supply caused by the ongoing pandemic, demand for milk and milk products has been lower.

The state had faced a similar problem in the year 2018 following which the government had announced an export subsidy of Rs 50 per kg. Exporting milk powder will lift demand and improve sentiment, dairy owners feel. Dairies in the state and other Milk Federations in Karnataka, Tamil Nadu, Rajasthan, Punjab have been seeking export subsidies as well.

Dairy owners say a subsidy of Rs 100 per kg is needed to overcome the current crisis in the sector. Last week, Gokul Dairy, among the largest dairy farms, announced a hike in prices in the State, by Rs 2 for buffalo milk and Rs 1 for cow milk. Last month, however, farmer organisations agitated for higher procurement prices for milk.  The state government relented and announced that Fair and Remunerative Price (FRP) would be considered for the dairy sector on the lines of the sugar segment. Maharashtra State Milk Producers and Processing Professionals’ Welfare Association said that SMP prices have reduced to Rs 170-180 per kg as compared to Rs 260 per kg before the lockdowns in the state. Now if the third Covid wave hits the state as predicted, the dairy sector shall be badly affected and it will become difficult for dairies to pay farmers.

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